Welcome to 2020 - the year of terrible optometry jokes! Four days of thought provoking speakers, analysts, strategists, and portfolio managers presenting in downtown Toronto has once again provided me with a wealth of information to share with you to start the new year. I have included my thoughts on what I have seen and heard after more than 25 presentations from well-respected market experts.

I had the opportunity to learn from Alfred Murata (for the fourth time in the last 12 months) the Manager of PIMCO Monthly Income, Noah Blackstein from Dynamic, Galen Weston from Loblaws, and Tom Porcelli the Chief U.S. Economist from RBC Capital Markets to name a few. While in Toronto, I also connected with some of the top RBC Dominion Securities colleagues from across Canada to share ideas, strategies, and a few stories once again.

There is a positive outlook for stock market growth in 2020. A number of presenters suggested that 2022 is their best prediction for the start of the next U.S. recession. We know that the U.S. consumer is the main driver of the U.S. economy, and with the current low level of unemployment and rising wages, the U.S. consumer is in great shape – helping to deflect U.S. recession worries in the short-term. I was surprised to learn that there are 7.3 million U.S. jobs available, compared to 5.8 million unemployed Americans (consumer confidence is high, although oddly enough – CEO confidence is low).

We do not project any Fed policy action taking place in 2020 (primarily because it is a U.S. election year)… which means no cutting of U.S. interest rates this year. The lowering of interest rates was one of the main catalysts for the solid stock market performance we saw in 2019. At home, our Canadian stock market (S&P/TSX Composite Index) was up 19.1% for 2019. The projected absence of interest rate cuts in 2020 is one of the reasons that I expect stock market growth to be more moderate than 2019.

As we head into the eleventh year of this period of U.S. economic expansion (the longest ever in U.S. history), it is likely that the stock market will not necessarily have a banner year. It will, in my view, outperform fixed income in 2020. With that being said, I continue focus significant attention on how best to benefit from the bright spots in 2020, while also preparing for an eventual pull back in the stock market. It is a delicate balance, as I continue to monitor and adjust our strategy in order to stay ahead of shifts in the global economic outlook.

With the next U.S. election taking place in November, many conference presenters shared their thoughts on how this election might impact the economy. If either Donald Trump or Michael Bloomberg win the election, they are likely to have the most positive impact on future stock market returns when compared to the other candidates. Bloomberg is a candidate in the Democratic Party primaries, but it is unlikely that Bloomberg even gets nominated. One consistent prediction from conference presenters is that President Trump will get re-elected in November 2020.

I believe that 2020 is a great time to take some portfolio profit, re-evaluate, and slightly reduce equity weightings in order to incorporate more investments that retain their value when the U.S. economic engine eventually starts to sputter.

Now is not the time to “swing for the fences” with investment portfolios. We need to be prudent and prepared throughout 2020 as markets will eventually experience a pull back down the road when the right catalyst comes along. There is absolutely no need to panic, but there is a heightened need for caution. It is very important to note that I continue to recommend owning high quality companies with great projections for growth (in an appropriate weighting), for all long term investors. My role continues to be utilizing the many thoughts and opinions of the most respected market experts to ensure we do everything possible to achieve the wealth management goals for the families we serve.  

Today, it takes an entire team of wealth management professionals to meet the needs of high-net-worth Canadians. I am honoured to have been invited to collaborate in this exclusive conference and humbled by the best in class professionals available to my team and I. With their help, we can continue to meet my personal standard of providing unparalleled service and professionalism throughout the next decade and beyond.

I am happy to chat or meet to further discuss the Weatherill Wealth Management Group of RBC Dominion Securities and how our process is designed to assist you in meeting your wealth management goals. You can contact me by clicking here, or emailing me at brad.weatherill@rbc.com.